17/06/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 17 June

NEWSPAPER AND WIRES
Hedge funds receive nearly three-quarters of their capital from institutional investors, according to a survey released on Wednesday that shows how these portfolios are no longer reserved for the rich but are investing nest eggs for teachers, firefighters and janitors, Reuters reports. It takes pension funds and endowments roughly three months to select a hedge fund, the survey shows, and they are very choosy, with 56% selecting only about 10 hedge fund investments a year. "The institutional sector of the hedge fund market has become more important in the wake of the market tumult, as these investors have stuck to the asset class in much greater numbers than the high-net-worth sector," said consultants at research firm Preqin.

Orkla Finans AS, in the industry’s latest retreat, made a “strategic decision” to close its €85m ($105m) Energy Fund and Carbon Fund, according to Bloomberg. Orkla’s energy fund, which traded commodities including Nordic and German electricity, natural gas and emission permits, lost 12% this year through April, while the specialist carbon fund gained 3.1% .“The closures have nothing to do with bad performance. It’s a strategic decision,” Yngve Torvanger Jordal, head of hedge fund products at Oslo-based Orkla Finans, said in a telephone interview. While the termination date hasn’t been decided, investors will get their capital this month, he said.

Investors clamouring for Europe-based "hedge fund-lite" portfolios in the wake of the credit crisis could still be cut off from their cash in a crisis, hedge fund executives have warned, reports Reuters. Some commentators fear these portfolios, designed to meet the EU's Ucits rules allowing funds to be widely sold, are not suited to all hedge fund types, and may hit problems if markets dry up and many investors want to pull out at the same time. "It's nonsense to create these liquid vehicles. It's much better to realise that hedge funds are an illiquid asset class," said Gerlof De Vrij, managing director of absolute return strategies at APG, which manages €240bn ($297.3bn) in assets. "We're not interested in Ucits funds. The focus on liquidity is something I don't understand."

Sovereign wealth funds and pension funds are backing start-up or small hedge funds again, said FRM Capital Advisors, bucking a trend seen since the credit crisis for clients to favour the perceived safety of big funds, says Reuters. Patric de Gentile-Williams, chief operating officer of hedge fund seeding specialist FRM, said his portfolios have raised a net $70m (£48m) so far this year -- after raising "very little" in 2009 -- and he expects further commitments. Total assets stand at about $360m. "Investors are allocating to this space," he said in an interview on the sidelines of the GAIM hedge fund conference here. "We're seeing the most sophisticated investors look at this space.

The San Diego County Employees Retirement Association board is scheduled to decide today whether to commit a total of $150m to two BlackRock hedge funds — Global Ascent Fund and the Emerging Markets Macro Fund, according to the agenda for its board meeting, reports Pensions and Investments. In one memo attachment by Lisa Needle, assistant chief investment officer, asks for $120m to the Global Ascent Fund and $30m to the Emerging Markets Macro Fund. In a second memo, she asks for $115m to Global Ascent Fund and $35m to Emerging Markets Macro Fund. Funding for the hedge funds would come from the association’s 70% stable value asset allocation target.

PEOPLE MOVES
Swiss asset manager Gam has announced the appointment of Rory MacEwen as a portfolio manager. MacEwen, formerly assistant vice president of Barclays Wealth, will join Gam’s London office on 21 June, reporting to Jonathan Colchester, head of UK private clients and working alongside existing portfolio directors on managing offshore fiduciary and international accounts. “We are delighted to have attracted a young relationship manager of such ability and enthusiasm, said Colchester. “His readiness to respond to client needs is of particular significance to us as we broaden the scope of what we offer.”

EFX Prime Services, a division of First New York Securities, has hired two prime brokerage executive to help lead the firm’s sales efforts. Jonathan Shapiro and Gary Mednick will both be based out of EFX Prime’s New York headquarters. Shapiro has over ten year of prime services experience, and joins EFX Prime from Goldman Sachs where he was senior relationship. Mednick, formerly of Grace Financial, is also the founder of On-Site Trading, a proprietary trading and agency brokerage. “We are pleased to add Jonathan and Gary to EFX Prime Services,” said Brian Stutman, managing director. “Their tremendous experience and specific areas of expertise will help our clients leverage our trading expertise, operational excellence and unique capital introduction effort.”

The former head of the Alternative Investment Management Association (Aima) has been appointed to the board of directors of listed hedge fund Alpha Strategic. Florence Lombard, who joins the board as a non-executive director, was head of the association between 1993 and 2008. Following the advent of the global financial crisis, she agreed to stay on as executive director focusing on the relationship with governments and policy makers internationally. A founding member and chair of the board of directors of the Chartered Alternative Investment Analyst Association and a director of the Institute for Global Asset and Risk Management, Lombard was appointed a non-executive director of Aima in April 2010.